The Department for Work and Pensions (DWP) may still write off over £140 million of IT assets as part of the government’s flagship welfare reform project, Universal Credit.
A damning National Audit Office (NAO) report last week found that DWP is unsure how much of its current IT will be viable for a national rollout and has had to already write off £34 million of newly built IT ‘assets’.
The main contractors supporting the Universal Credit programme are IBM, HP, Accenture and BT, but it seems that much of the blame is currently falling on the department itself for poorly managing the programme and giving the suppliers free reign.
Speaking to the Public Accounts Committee this week, Dr Norma Wood, interim director general at the Major Projects Authority, who was brought in to work on a 12-week ‘reset’ of Universal Credit in February, said that the IT write off figure will be “substantial”.
Dr Wood said that when she joined the programme much of the technology being used in the pathfinders – intended to test Universal Credit’s systems – was not appropriate for a nationwide rollout. She said that what had been developed for the pathfinders was narrow, couldn’t handle changes in circumstances, and had poor security.
It remains unclear how much of this technology will be used going forward – the Cabinet Office is currently conducting a review before DWP’s revised business plan is signed off and the Government Digital Service is working on building an enhanced IT system for Universal Credit.
“You clearly want to salvage whatever you can from the expenditure that has been made [but] at the time of the review there was potential for a sizeable write off,” said Dr Wood.
When asked to scale the feasibility of the technology used in the pathfinders, Wood said when she joined the programme the quality of the systems and their potential for use on a national level ranked at a 1 out of 10. However, Dr Wood did that this may have improved since then, but she does not have visibility into the programme anymore.
Dr Woods said during the questioning that she believed the size of the write-off would be at least £140 million, with members of the Public Accounts Committee frequently referring to estimates as high as £200 million.
However, finance director general at DWP, Mike Driver, said that the department was awaiting a second ‘impairment review’ and his best estimate for a write off of IT assets stood at £161 million.
Chair of the Committee Margaret Hodge said during the questioning that the NAO report examining the Universal Credit project was “one of the worst” she has read and that the project had been “out of control”. Hodge also said that a “blank cheque” had been given to the suppliers involved.
She referenced a PwC report that examined the finance controls used by DWP throughout the programme, where there were examples of some 15 purchase orders and payments being approved by a “personal assistant”.
Dr Wood said she couldn’t put a value on how much these purchase orders were worth.
Universal Credit aims to merge benefits such as jobseeker’s allowance, income support, housing benefit, child tax credit, and working credit. The IT system supporting it will require real-time data on the earnings of every adult, from a new Pay as You Earn (PAYE) system being developed by HM Revenue & Customs (HMRC).
DWP plans to spend £2.4 billion to implement Universal Credit up to April 2023 and has spent £425 million up to April 2013. Most spending so far (£303 million) has been on contracts for designing and developing IT systems. However, to date there have been a number of suspected problems with delivery.